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Both can pay you a steady monthly amount, but an SWP draws from a mutual fund that keeps growing, while an FD pays fixed interest on a locked deposit.
| Factor | SWP | FD |
|---|---|---|
| Income source | Withdrawals from a growing fund | Fixed interest payout |
| Return on balance | Market-linked (can outpace withdrawals) | Fixed 6–7.5% |
| Tax | Only the gain part of each withdrawal | Full interest at your slab |
| Capital | Grows or depletes with markets | Principal safe, returned at maturity |
| Flexibility | Change or stop anytime | Premature-withdrawal penalty |
Verdict
An SWP from an equity or hybrid fund can give an inflation-beating, tax-efficient income over long horizons but carries market risk; an FD gives certainty. Retirees often keep a few years' expenses in FDs and the rest in an SWP.
Sources
Reviewed against primary sources. Rates and rules change — confirm current figures with the official source before acting.
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